FTSE 100 Drops as Banks and Miners Lead Market Decline

London’s FTSE 100 slipped 0.9% to 10,787.93 points on Monday by 0958 GMT, Reuters reported, pulling back from a three-session winning streak as a regulatory probe into Barclays collided with ongoing anxieties over Middle East and Ukraine oil prices. The midcap FTSE 250 slipped 0.3% to 24,184.96 points, while the blue-chip index had finished the previous session 1.08% higher at 10,840.35.

Bank of England Probe Drags Down Banking Sector

Financial heavyweight Barclays saw its shares slide 2.7% after the Financial Times reported that the Bank of England is examining whether the firm’s traders misrepresented illiquid private credit loans to understate their risk. That scrutiny dragged the broader banking sector down by 1.8%. Other UK lenders also felt the squeeze, as NatWest and Lloyds shares dropped alongside utilities and pharmaceutical stocks.

Mining Stocks Lead FTSE 100 Decline

Industrial metal miners and aerospace and defence stocks each fell about 2% on the index, with mining stocks leading the FTSE 100’s decline as Antofagasta plunged 6.5%, Rio Tinto fell 4.2% and Anglo American lost 4%. Meanwhile, Brent crude futures traded over $107 a barrel despite dropping 2% on the day, keeping inflation concerns front and centre. Oil prices dropped after Donald Trump waived some sanctions on Russia, yet Brent remained stubbornly high following a hefty weekly gain.

AJ Bell investment director Russ Mould
“France apart, (European) government bond yields are stable, and oil prices have pulled back from recent highs, but both remain elevated to reflect the ongoing uncertainty around Ukraine and the Middle East.”

Amid the broader market dip, energy shares managed a modest 0.4% gain, standing out alongside select tech stocks. However, operational setbacks hit individual firms hard, such as Serica Energy dropping 2.6% after flagging further delays to the restart of its Triton production vessel and lowering its annual production forecast.

Upcoming UK Budget and Economic Inflation Tests

Investors are turning their attention toward upcoming UK September inflation and retail sales figures, alongside a heavy earnings calendar. Adding to the domestic political focus, Finance Minister John Healey’s first budget speech is scheduled for next week. Previous media reports indicate he plans to introduce income tax on family business transfers and windfall taxes on banks.

More on this story: US Stocks Fall as Rising Oil Prices and Treasury Yields Weigh on Markets